Career CFO vents her frustration over business, human capital, economics, social environment, culture, politics, and everything else; but always with a monetary twist

January 2013 posts

January 25, 2013

Check out my article in the January Communication Issue of Pragmatic Marketer. It advises marketing professionals and product managers on ways of effective cooperation with financial functions inside their organizations:

January 23, 2013

According to common definitions, a tragicomedy is supposed to have both funny and sad elements, making you laugh and then cry, or the other way around. For me personally, this genre achieves the strongest effect when it generates a subtle emotional shift: one minute you are laughing your head off and in the next moment, even though nothing drastic happens, you find yourself with a face full of tears; you don't even notice how it happens. You know what I'm talking about... All Russian "comedies" are tragicomedies and so are Salvador Dali's paintings. Fellini was a master of the genre - that is because he understood that Life itself is a tragicomedy. What a movie he could've made out of this fiscal "cliff-hanging" bullshit!

First I was chuckling softly to myself on account of the make-believe "impasse" antics so eagerly played out by the White House and the Capitol up until December 31st after more than 500 (!) days of supposedly diligent preparations. We know we cannot take this seriously anymore - we've seen this happening before. Why are they threatening each other? What were they going to do if they didn't reach some sort of a half-ass decision? Jump out of their windows? We are not that lucky.

I was roaring with laughter when our Nation's executives, who have US Treasury, the Federal Reserve, IRS, Government Accountability Office, a bunch of Nobel Prize Laureates in Economics and what have you at their disposal, shyly admitted that for decades they've been forgetting about the goddamn INFLATION (!!!) whenever they tried to separate the middle-class from the wealthy or establish alternative-minimum tax (ATM) exclusions. Now the stupid $250K mark of "the rich" I previously cursed is out of the window replaced with more sensible $400K. The ATM scheme got eased up as well and it will be indexed to the value of money from now on.

I hope you agree with me that the 5% increase of the capital gains tax rate from 15% to 20% for the upper class is also a laughable point. Some commentators declare that the proverbial "1%" lost. I say, "Bravo! Great win, you, guys - just 5%!" Apparently, it's Ok to tax the top tier of my earnings at 35%, while someone with $1 billion of assets and $100 million of annual gains contributes 20%! Do we really think that additional $5 million will make that much difference in a life of a family that can afford anything they could possibly imagine? I mean, Dolce and Gabbana just became billionaires on account of increased demand for luxury goods!

On the other hand, someone who makes $100k a year will really miss the $2,000 that will be taken out of his net earnings due to the reversal of the Social Security tax rates after only two years of relief. You cannot help feeling a little sad about it, especially when you consider that 77% of American households are affected by this change. If each of these families loses on average around $1,000 of disposal income, it will translate into nearly $90 billion drop in consumption of goods and services. I felt kind of embarrassed, though, shedding a tear about it. After all, we've been contributing 6.2% into Social Security fund forever. We knew that the 4.2% rate was only a temporary abatement.

But now, three weeks later, I cannot shake off a feeling of desperation. Oh, there were no new developments or anything like that - everyone in Washington was too busy preparing for the inaugural celebrations. It's just that the general public's hopeless ignorance became evident once again and it is tragic. It appears that the immediate reduction of the paychecks is one and only concern for the majority of people. The short-term loss is blinding - it works as a diversion from far more important issues.

People forgot that the fiscal cliff deal wasn't just about the government's revenues. The other side of it, the one that deals with the federal spendings, wasn't and still hasn't been addressed at all. If no solution is developed, the Nation will require to borrow again, even though the already raised Debt Ceiling has been (surprise!) reached.

But I have much scarier questions. Why the hell the government is using my Social Security contributions to plug their fiscal deficits? Why are they funding somebody else's payments with my money? What happened to the money current retirees contributed from their own paychecks? Where did they go? Oh, don't worry - I'm well informed. These are rhetorical questions. I know that my generation is the last one that MAY BE able to get federal retirement benefits and that our children do not stand a chance to get even 50% of what they shell out of their earnings. But why are we not wailing about it on every corner?